3 Ways to Capitalize on the Off-Premises Boom

The global food delivery market was worth $114 billion in 2016.
The global food delivery market was worth $114 billion in 2016.
flickr: Sean Davis

Virtual restaurants. It was an inevitable outcome of today’s unprecedented surge in food delivery and to-go orders coupled with the technology takeover of the food industry. Nine “restaurants” opened in Chicago with no dine-in service—they’re all to-go all of the time. All nine operate out of one anonymous storefront, cooking and packing up orders for mostly millennial customers on GrubHub.

So far, the concept is working. Green Summit has raised $3.6 million since its launch and is projecting about $18 million in sales in 2017 and posted a run rate of $10.5 million in March, surpassing its initial revenue projections.

Green Summit appears to have hit the bull’s-eye in the Zeitgeist of today’s restaurant world—offer to-go and delivery or die. While the majority of the restaurant industry’s $500 billion in annual sales still comes from dine-in customers, pick-up and delivery represent the most significant growth opportunity for restaurants today.

Industry stats point to healthy growth projections for third-party delivery and to-go orders:

  • By 2016, 61 percent of restaurant visits were takeout orders, according to QSR.
  • Online ordering accounts for more than a third of the $30 billion in annual delivery sales, according to a 2016 study by Morgan Stanley.
  • More restaurant concepts in the coming years will be designed specifically for delivery, automation and mobile ordering, says Euromonitor International.
  • The global food delivery market was worth $114 billion in 2016, and Euromonitor expects it to grow by 8.5 percent a year through 2021.
  • Using online and mobile platforms, a restaurant can increase its takeout order volume by 20 percent, according to a GrubHub Economic Impact Study.

Overcoming Dine-Out Operational Challenges

Clearly, the profit potential for this rapidly growing “dine-out” trend is exceptional. But to leverage the opportunity, restaurants first need to adapt their operations and overcome many hurdles. Below are three operational modifications that can help restaurants make the transition from dine-in to dine-out smoother and more profitable.

1. Consider Modifying Your Restaurant’s Layout

How and where in your restaurant are you taking and fulfilling delivery and to-go orders? Do you have a POS dedicated to third-party delivery, to-go pick-ups, or your own delivery staff? Physically separating the flow of your dine-in versus your takeout business can have a significant impact on staff productivity and, therefore, your bottom line.

2. Adapt Your Forecast When Weather Changes

As with many industries, inclement weather can be detrimental to a business owner’s sales, while excellent weather can swamp a business. For example, a drop in winter temperatures usually means a drop in sales. But the takeout and delivery trend is changing that dynamic for many restaurants.

Whether it’s too hot or too cold, the impact of weather on the volume of take-out and delivery is emerging as an important aspect for staying on top of staffing and inventory needs at today’s restaurants. Smart tools for restaurant managers, like Accuweather feeds integrated into restaurant management systems, make it easier to forecast everything from drive-thru to patio server volume. Operators should make sure they choose technology that can recommend percentage forecast adjustments for up to two weeks out based on how the weather has historically impacted a business.

3. Alter Your Forecasts at the Revenue Center Level

Restaurants need to accurately forecast staffing around the unique volume created by take-out and delivery orders. Further, inventory is also another critical area that demands better forecasting. The most effective way to achieve that objective is to separate the various revenue centers of a restaurant and apply forecasting capabilities such as:

  • View by Day and Time Interval. Get precise sales and labor projections with visibility into each revenue center in 15-minute increments.
  • Forecast by Activity. Gain flexibility when creating schedules for different job codes resulting in even more precise forecasting.
  • Schedule by Area. Gain the ability to schedule back of house and front of house differently, based on business needs.

To effectively meet and profit from today’s rapidly expanding demand for take-out and delivery, restaurants are forced to make operational modifications. But the changes don’t have to be painful. Predicting demand with better, more nuanced forecasting tools gives restaurant managers a greater chance of riding high on the dine-out wave rather than crashing into the weeds on shore.

David Cantu is cofounder and chief customer officer of HotSchedules, the leading provider of mobile, cloud-based technology for the restaurant, retail and hospitality industries.  David’s 17+ years of restaurant operations experience have contributed to HotSchedules’ product development and innovative solutions to improve restaurant operations scheduling efficiencies, labor management, and increased employee engagement. Through his leadership, HotSchedules repeatedly achieved more than 40 percent annual growth goals and was consistently recognized on the Inc. 5000 and Austin Business Journal’s Fast 50 growth indexes. Committed to serving those who serve, HotSchedules provides a comprehensive suite of solutions that make working for and in restaurants—and beyond—more rewarding and efficient.